frank and john can refer to the Gross Domestic Product (GDP) to understand how government economists view the price situation, GDP accounts for changes in price level and provide a more accurate figure of economic activities over a given period of time.
Question:
Graded assignment(towards 15% Hw grade) Saved Help Save& Exit Submit Check my work Your landscaping company can lease a truck for $7,800 a year (paid at year-end) for 6 years. It can instead buy the truck for $38,000. The truck will be valueless after 6 years. The interest rate your company can earn on its funds is 7%. 10 points
What is the present value of the cost of leasing?
Answer:
Cost of lease = $37,179.01
Explanation:
Leasing is a finance arrangement where one party (the lessor) transfers the right to use an asset to another party (the leasse) in exchange for a rent.
The cost of a lease to the leasee is the present value of the future lease payment discounted at the cost of capital.
So using the present value of annuity formula, we can work out the cost of the lease arrangement as follow:
PV =A× (1- 1+r)^(-n)/r
PV- Present Value
r- interest rate
n- number of years
A- annual lease payment
PV -
A-7,800
r-7%
n-6
PV = 7,800× (1- (1.07)^(-6)/0.07 = 37,179.01
Present Value = $37,179.01
Cost of lease = $37,179.01
<span>For individual taxpayers, deductible losses for tax purposes do not include personal losses. </span>
Answer:
Please refer explanation
Explanation:
A. Many small shops sell different styles of sweaters. Some stores sell higher-quality and more expensive sweaters then other stores.
1. many
2. differentiated
3. easy
4. price-searcher
Monopolistic competition is whereby there are many firms selling similar products and services but are not perfect substitutes. They may be different in quality, design or style. Barriers to entry are low and any one firm’s decision does not necessary affect all others. These firms tend to have limited price setting powers and they make use of heavy adverting and brand differentiation.
B. Hundreds of high school students who require tutoring in algebra choose among dozens of tutoring companies offering similar services.
1. many
2. standard
3. easy
4. price-taker
Perfect competition is a market structure where there are many firms selling homogenous or commodity products, such as a fruit or vegetable vendor. They do not have the ability to influence the price and they take the price that they receive. There is free flow of information between sellers and buyers regarding the goods sold as well as the prices of goods and services sold. Firms can easily enter and exit the market.
C. Four Internet providers offer similar services to almost everyone in the city. Any new company would have to engage in a price war with the existing companies.
1. few
2. standard
3. challenging
4. oligopoly
Oligopoly is an imperfect market structure with a small number of firms who are impacted by each other’s actions. Oligopolies may collide either explicitly or tacitly in order to restrict output or fix prices and achieve above normal market returns. Government policies and regulations are placed to encourage or discourage oligopolistic behavior and ensure that consumers are not exploited.
D. Only one pharmaceutical company has a government patent to sell an experimental drug.
1. one
2. unique
3. impossible
4. monopoly
A monopoly refers to a single company dominating the market in an industry. It has a proportionately large market share. This can be due to an absence of proper restraints. They have control of the price in the market for that product. There are very large batters to entry and exit, they exploit economies of scale and are able to make abnormal profits in the industry.
